Alexandria Real Estate Equities, Inc. · NYSE:ARE
Alexandria Real Estate Equities — Q4 2014 Earnings Presentation
59 slides from Alexandria Real Estate Equities's earnings presentation, Feb 2, 2015
Slide 1: Earnings Press Release and Supplemental Information, Q4 2014
ALEXANDRIA REAL ESTATE EQUITIES, INC. EARNINGS PRESS RELEASE AND SUPPLEMENTAL INFORMATION | NYSE:ARE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2014 x. New York City ALEXANDRIA. San Francisco Collaborative Science and Technology Campuses in Urban Innovation Clusters
Slide 2: Table of Contents
ALEXANDRIA REAL ESTATE EQUITIES, INC. December 31, 2014 Table of Contents Page EARNINGS PRESS RELEASE Fourth Quarter and Year Ended December 31, 2014, Financial and Operating Results Guidance Earnings Call Information and About the Company Consolidated Statements of Income Consolidated Balance Sheet
Slide 3: Reports Fourth Quarter and Year Ended December 31, 2014 Results
Alexandria Real Estate Equities, Inc. Reports Fourth Quarter and Year Ended December 31, 2014 Financial and Operating Results Total Return of 44.7% in 2014 FFO Per Share – Diluted, as Adjusted, of $4.80 for 2014 , up 9.1% over 2013 EPS – Diluted of $1.01 for 2014 Total Revenues of $726.9 million for
Slide 4: Occupancy 2012-2014
97.0% 95.9% 94.6% 2012 2013 2014
Slide 5: Rental rate growth 2012-2014
5.4% 9.5% 4.5% 3.5% (0.5%) 2012 2013 2014 2012. +2013 2014
Slide 6: Net operating income 2012-2014
$508.6 $442.1 $401.7 2012 2013 2014
Slide 7: Growth metrics 2012-2014
16.2% (2.0%) 2012 +2013 2014 2012 2013 2014
Slide 8: Lease structure percentages
Percentage of triple net leases 95% Percentage of leases containing annual rent escalations 94% Percentage of leases providing for the recapture of capital expenditures 93%
Slide 9: Same property NOI change, cash basis
Percentage change in same property NOI over preceding period – cash basis
Slide 10: NOI Included in All Comparative Periods
NOI Included in All Comparative Periods Operating Properties Recently Completed Properties Under Active Legend Developments Redevelopments Development Redevelopment
Slide 11: Same property data as reported
Same property data as reported Yes Yes (1) Yes (1) No No Same property operating portfolio Yes No No No No Same property data including redevelopments Yes No Yes No Yes (1) Recently delivered developments and redevelopments are included in the same property data for each of the year-over-year compar
Slide 12: Investment-Grade Client Tenants
Investment-Grade Client Tenants: 56% of ARE’s Total ABR (By ABR) Multinational Pharmaceutical Institutions (Academic/Medical, Non-Profit, and U.S. Government) Life Science Product, Service, and Device Biotechnology: Public & Private • AstraZeneca PLC • Bayer AG • Bristol-Myers Squibb Company • Eisai
Slide 13: Value-creation pipeline overview
16% 90% Current Leased/ Current Development/ (CIP) Under Redevelopment Projects Negotiation 50, 60, & 100 Binney Street Near-Term Cambridge, MA (CIP) a Other in North America Future North America Other
Slide 14: Non-income-producing assets as percentage of investments
(1) Represents non-income-producing assets as a percentage of gross investments in real estate, including our pro rata share of non-income-producing assets at our unconsolidated joint ventures. (2) Net reduction of 3% in non-income-producing assets consists of a decrease of 4% due to highly-leased d
Slide 15: Greater Boston: 75/125 Binney Street
Greater Boston Cambridge 75/125 Binney Street 388,270 388,270 99%
Slide 16: New York City: East 29th Street
New York City Manhattan 430 East 29th Street 177,221 418,638 (1) 91%
Slide 17: San Diego: Torrey Pines
San Diego Torrey Pines 3013/3033 Science Park Road 123,891 165,938 (1) 81%
Slide 18: Greater Boston: Route Second Avenue
Greater Boston Route 128 225 Second Avenue 112,500 112,500 100%
Slide 19: San Diego: Sorrento Valley
San Diego Sorrento Valley 11055/11065/11075 Roselle Street 31,277 55,213 (1) 75%
Slide 20: San Diego: 5200 Illumina Way Building 6
San Diego University Town Center 5200 Illumina Way – Building 6 295,837 295,837 100%
Slide 21: Research Triangle Park
Research Triangle Park Research Triangle Park 6040 George Watts Hill Drive 61,547 61,547 100%
Slide 22: San Francisco Bay Area: Mission Bay
San Francisco Bay Area Mission Bay 1455/1515 Third Street 422,980 422,980 100%
Slide 23: Total and near-term value-creation development projects
Total/weighted average 1,871,535 2,334,459 90% Total Project Near-term value-creation development projects (2) Square Feet Negotiating % San Diego University Town Center 10300 Campus Point Drive – Building 2 143,086 75% (3)
Slide 24: Greater Boston: Cambridge Binney Street
Greater Boston Cambridge 50 Binney Street 276,371 100% (3)
Slide 25: Greater Boston: Cambridge Binney Street
Greater Boston Cambridge 60 Binney Street 264,150 100% (3)
Slide 26: San Diego: University Town Center
San Diego University Town Center 5200 Illumina Way 386,044 —%
Slide 27: Seattle: Lake Union
Seattle Lake Union 1165 Eastlake Avenue East 106,000 —%
Slide 28: Greater Boston: Cambridge Binney Street
Greater Boston Cambridge 100 Binney Street 416,788 100% (3)
Slide 29: San Francisco Bay Area: SoMa Townsend Street
San Francisco Bay Area SoMa 510 Townsend Street 300,000 100% (3)
Slide 30: New York City: East 29th Street
New York City Manhattan East 29th Street 420,000 (4) —%
Slide 31: San Diego: Campus Point Drive Building 3
San Diego University Town Center 10300 Campus Point Drive – Building 3 150,353 —%
Slide 32: Seattle: Dexter Avenue North
Seattle Lake Union 400 Dexter Avenue North 253,000 —%
Slide 33: Total/weighted average near-term projects
Total/weighted average 2,715,792 50% (1) Portion of project was delivered in 2014, see pages 32 , 33 , 34 , and 36 for RSF currently under construction. (2) See page 20 for RSF targeted for redevelopment. (3) Under negotiation or subject to letter of intent. (4) We hold a right to ground lease a par
Slide 34: Value-Creation Development Projects
Value-Creation Development Projects
Slide 35: Value-Creation Redevelopment Projects
Value-Creation Redevelopment Projects
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Slide 39: Deliveries of value-creation development projects
Occupancy and % of Project Delivered (1) Unlevered Placed into Service in 4Q14 RSF In Service Total Project Average Cash Yield Initial Stabilized Yield (Cash Basis) Initial Stabilized Yield Leased/ Negotiating Investment Address/Market – Submarket Date RSF Prior to 4Q14 Total Development projects in
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Slide 43: Current value-creation projects: property details
Property 6040 George Watts Hill Drive 360 Longwood Avenue 1455/1515 Third Street Submarket/ Market Research Triangle Park/ Research Triangle Park Longwood Medical Area/ Greater Boston Mission Bay/ San Francisco Bay Area RSF (in progress) 61,547 258,012 422,980 Project Type Development Unconsolidated
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Slide 47: Uber Technologies building design note
(1) We are currently working closely with Uber Technologies, Inc. to revise the core and exterior architecture of the building design.
Slide 48: Background: Alexandria Center at Kendall Square
Background Alexandria received final approval from the City of Cambridge to develop the Alexandria Center™ at Kendall Square, a fully integrated campus featuring four world-class office/laboratory and tech office buildings, high-quality amenities, and green space. Alexandria’s entitlement efforts re
Slide 49: Background: Townsend Street, SoMa
Background Alexandria’s 510 Townsend Street project was acquired in April 2014 and represents an expansion of our successful Mission Bay science and technology campus into the SoMa submarket. The site is ideally located at the corner of Townsend and 6th Streets, placing it within close proximity to
Slide 50: Background: Illumina campus
Background Alexandria owns and operates the headquarters campus of Illumina, Inc., the leading developer, manufacturer, and marketer of life science tools and integrated systems for large-scale analysis of genetic variation and function with a market capitalization of $23.3 billion as of September 3
Slide 51: Background: 10300 Campus Point Drive
Background 10300 Campus Point Drive is Alexandria’s flagship 449,759 RSF, multi-tenant office/laboratory campus in University Town Center with additional developable square footage. Also in 4Q14, we added 153,439 RSF to our near-term development pipeline at this site, reflecting our efforts to incre
Slide 52: Background: Lake Union, Seattle
Background Alexandria’s Eastlake Avenue East and Dexter Avenue assets are located in Lake Union, home to numerous highly renowned medical research institutions, including the Fred Hutchinson Cancer Research Center and the University of Washington, as well as the corporate headquarters for Amazon.com
Slide 53: Projected Construction Spending 2015
(1) Based upon mid-point of 2015 guidance for construction spending of $695 million and actual acquisitions to date in January 2015 of $231 million. Projected Construction Spending Year Ended December 31, 2015 Current value-creation projects in North America: Development (Consolidated) $ 167,000 Dev
Slide 54: Actual Construction Spending 2014
(1) Based upon $523.8 million of construction spending and $290.0 million of acquisitions completed in 2014. See page 46 for further detail of 2014 acquisitions. Actual Construction Spending Year Ended December 31, 2014 Development – North America $ 310,540 Redevelopment – North America 65,143 Prede
Slide 55: Key credit metrics and target range
7.2% 6.5x to 75x 6.0x to 7.0x 4Q13 4Q14 2015 Goal Target Range
Slide 56: Investment-Grade Client Tenants
Investment-Grade Client Tenants: 56% of ARE’s Total ABR
Slide 57: Key credit metrics: coverage ratios
to to 3.5x 3.5x 4Q13 4Q14 2015 Goal Target Range
Slide 58: Gross Assets
Gross Assets (4) $9.3 Billion
Slide 59: Summary of debt maturities
5.6 Years Weighted Average Remaining Term $908 $1,000 5 $900 $800 $700 4 $636 $600 $506 $552 $526 $500 4 s4o0 $300 4 $200 4 $100 50 nai a: Em 2 — 2015 -2016.-~—2017,-=S «2018 =~ 2019 Ss 2020S 2021.:~=S 2022S «2023S 2024 = 2025 «Ss «2026~=S 2027S 2028 += 2029 $300 C1 Mi Secured notes payable Unsecure
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